The Supreme Court on Thursday extended its relief to stressed borrowers clarifying that no account is to be declared NPA till further orders.
The relief from Supreme Court came after the Centre said an expert panel has been set up to look into the issue of interest being charged by banks on deferred installments during the moratorium period. The moratorium on loan repayments was allowed by the Centre due to the COVID-19 pandemic.
The SC granted two weeks to the Centre and Reserve Bank of India (RBI) to file an affidavit clarifying its stand in this regard.
On September 3, in a relief to stressed borrowers who are facing hardship due to the impact of the COVID-19 pandemic, the top court had said that accounts that were not declared as non-performing assets (NPA) till August 31 this year, shall not be declared NPA till further orders.
Last opportunity to Centre
A bench of Justices Ashok Bhushan, R Subhash Reddy and MR Shah posted the matter for further hearing on September 28. The bench said it expects the government and RBI to actively consider all the issues.
The bench clarified that it was giving one last opportunity and thereafter the matter will not be adjourned.
Multiple pleas against interest being changed on deferred payments
The top court was hearing a batch of pleas which have raised the issue of interest being charged on installments which were deferred during the moratorium period due to the COVID-19 pandemic.
Govt considering the issue at the highest level
Solicitor General Tushar Mehta, appearing for the Centre said that the government at the highest level is considering all issues raised in the batch of petitions and within two weeks, an appropriate decision will be taken with regard to the problems faced by different sectors during the pandemic.
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He said that everything has to be considered holistically and the government is considering all the sectors for which an expert panel has been constituted.
The bench told Mehta that concrete decisions should be taken with clarity so that the matter does not get adjourned again.
Mehta said that with regard to concerns expressed by the petitioners in the last hearing, two to three rounds of meeting have taken place and issues are being examined.
He sought deferment of the hearing by two weeks saying that considered decisions have to be taken in consultation with all stakeholders including banks which play a vital role in the issues at hand.
Banks’ association says guidelines for individual borrowers required
Senior advocate Harish Salve, appearing for banks’ association said that norms and guidelines have to be issued with regard to individual borrowers.
The bench asked who will formulate these norms to which Salve replied that the Ministry of Finance will do as it has been done at the level of RBI.
Mehta said that it is being done at a level higher than the RBI and whatever will be there it would be comprehensive.
Salve pointed out that for the power sector, the states will have to be taken on board as entire loans cannot be put on banks.
Downgrading of borrowers must be protected
Senior advocate Kapil Sibal, appearing for CREDAI said that the current restructuring of loans won’t provide relief to 95 per cent of borrowers. He pointed out that the downgrading of borrowers is continuing which must be protected.
Sibal sought extension of the loan moratorium, stay on downgrading and levying of interest.
Banks charging compound interest
Senior advocate Rajeev Dutta, appearing for borrowers said that banks are charging compound interest while now the loans are being restructured which should be done earlier.
Contending that the government should make its stand clear on charging of interest on interest by banks, he said that lakhs of people are in hospitals and many have lost their sources of income.
Downgrading being done based on existing norms
Senior advocate V Giri, appearing for RBI said that downgrading is being done on an individual basis and as per existing norms. He sought deferment of hearing by two weeks saying all issues are under active consideration at the highest level.
Salve told the court that now the matter has become adversarial and urged the court to implead banks association in all the petitions on the issue.
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